The Treasury will bring about a dollar rise amid financial concerns after we downgrade

Caroline Vallett Kevic

NEW YORK (Reuters) – The extended Treasury yield was significantly eased Monday amid concerns over the US debt load and tax cut bill, following Moody’s downgrade to the country’s sovereign credit rating.

The US major equity index was recovered from early losses, making the day slightly higher from flat.

Late Friday, Moody’s Investors Service cut the US sovereign credit rating from the top triple A rank, highlighting the country’s deteriorating fiscal outlook.

President Donald Trump’s vast tax bill was approved by a major Congressional committee on Sunday. Republicans who control the U.S. House of Representatives will try to push the bill towards passing this week.

Treasury yields for 30 years reached an 18-month high before retreating these levels. Investors were concerned that the tax bill would increase its debt burden more than previously expected.

The 30-year bond yield rose from 3.7 basis points to 4.934% after touching on 5.037%. This is the best since November 2023. The Benchmark US 10-Year Note yield rose to 4.469% to 3 basis points, reaching 4.564% since April 11th.

“What Moody’s did was really iconic more than anything else. Other institutions had already downgraded their debt,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

“Yes, the yields are high in the news… but they’re up for other reasons too,” he added. “In general, the (equity) market hasn’t responded much to Moody’s announcement. Rather, it’s a market that has come into the scene and is probably trying to consolidate recent moves.”

The downgrade from Moody’s follows a similar move from Fitch in 2023 and Standard & Poor’s in 2011.

US Treasury Secretary Scott Bescent used a television interview on Sunday to deny the downgrade.

Some Federal Reserve on Monday commented on the US market after the downgrade. At a meeting held by the New York State Mortgage Bankers Association, New York President John Williams said investors were “clearly” weighing their future options.

Nevertheless, he said investors “continue to view the United States as “the United States.”

The Dow Jones industrial average rose 137.33 points (0.32%) to 42,792.07, with the S&P 500 at 5.22 points (0.09%) to 5,963.60, with the Nasdaq Composite at 4.36 points and 0.02% at 19,215.46.